RBS 2012 Annual Report Download - page 381

RBS GROUP 2012
379
Variable compensation awards
The following tables analyse the Group and Markets variable compensation awards for 2012 (1).
Group Markets
2012
£m
2011
£m
Change
%
2012
£m
2011
£m
Change
%
Non-deferred cash awards (2) 73 70 4 10 9 11
Non-deferred share awards 27 34 (21)17 21 (19)
Total non-deferred variable compensation 100 104 (4)27 30 (10)
Deferred bonds awards 497 589 (16)212 264 (20)
Deferred share awards 82 96 (15)48 66 (27)
Total deferred variable compensation 579 685 (15)260 330 (21)
Total variable compensation pre clawback (3) 679 789 (14)287 360 (20)
Clawback of prior year deferred awards (4) (72)— — (72)— —
Total variable compensation (3) 607
789 (23)215 360 (40)
Increase in operating profit (5) in 2012 90% 68%
Variable compensation (pre clawback) as a % of operating profit (5) 20% 43% 19% 40%
Variable compensation (pre clawback) as a % of operating profit
before variable compensation (6) 16% 28% 16% 25%
Variable compensation (post clawback) as a % of operating profit
before variable compensation (6) 15% 28% 12% 25%
Proportion of variable compensation pre clawback that is deferred 85% 87% 91% 92%
Operating profit for the Group increased by 90% and for Markets by 68% in 2012. Variable compensation as a proportion of operating profit before
variable compensation decreased to 16% from 28% in 2011 for the Group and to 16% from 25% for Markets. At a constant proportion as for 2011
variable compensation for 2012 would have been c.£500 million and c.£160 million higher for the Group and Markets, respectively.
Reconciliation of variable compensation awards to income statement charge 2012
£m
2011
£m
Variable compensation awarded 679 789
Less: deferral of charge for amounts awarded for current year (262)(298)
Add: current year charge for amounts deferred from prior years 299 484
Income statement charge for variable compensation (3) 716 975
Actual Expected
Year in which income statement charge is expected to be taken for deferred
variable compensation 2011
£m
2012
£m
2013
£m
2014
and beyond
£m
Variable compensation deferred from 2009 and earlier 155 75 — —
Variable compensation deferred from 2010 329 93 78 4
Variable compensation deferred from 2011 — 190 49 21
Clawback of variable compensation — (59) (10)(3)
Variable compensation for 2012 deferred — — 199 63
484 299 316 85
Notes:
(1) The tables above relate to continuing businesses only. Discontinued businesses in 2012 amount to £24 million (2011 - £32 million). In addition 2011 has been restated to include sales incentive and
long-term incentive plan expense of £12 million which has been reclassified in 2012, as well as £6 million for the UK branch-based businesses which was included in disposal groups in 2011.
(2) Cash payments to all employees are limited to £2,000.
(3) Excludes other performance related compensation.
(4) Relates to the clawback of prior year variable compensation awards which forms part of the LIBOR actions taken by management detailed on page 380.
(5) Reported operating profit before one-off and other items.
(6) Reported operating profit pre variable compensation expense and before one-off and other items.